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Does the English Rule Discourage Low-Probability-of-Prevailing Plaintiffs?

NCJ Number
177168
Journal
Journal of Legal Studies Volume: 27 Issue: 1 Dated: January 1998 Pages: 141-157
Author(s)
A M Polinsky; D L Rubinfeld
Date Published
1998
Length
17 pages
Annotation
This article discusses whether the English litigation procedure (under which the loser pays the winner's litigation costs) better discourages suits by low-probability-of-prevailing plaintiffs than the American system (in which each side bears its own costs).
Abstract
One of the principal results in the economic theory of litigation is that the English rule of fee allocation is better at discouraging suits by low-probability-of-prevailing plaintiffs than the American rule. This result has been demonstrated under the assumption that all suits that are filed go to trial. Using a standard asymmetric-information model of litigation, the article shows that when the settlement process is taken into account the English rule results in more low-probability-of-prevailing plaintiffs going to trial than the American rule. The English rule causes a greater number of cases to go to trial, and all of these additional cases involve plaintiffs whose probability of prevailing is less than that of plaintiffs who go to trial under the American rule. In this sense, the English rule encourages low-probability plaintiffs more than the American rule. Notes